There's a Adam Wherry column up, describing how Justin's search for (((FAIRNESS))) brought him awry with farmers, doctors, and entrepreneurs. It's a sad story, really, of a man with noble aspirations being mired in the muck of the deplorables ...

Justin's noble aims have got him in trouble with the louts. They are unworthy of him.

The louts are thinking: What's 'fair' in the mind of a guy whose first step as PM was to double the number of nannies he needs? What is fair about a guy living off his daddy's trust fund? How can a trust fund baby who offloads as much of his family expenses as he can on the people of Canada -- like the crassest of politicians -- how can such a creep claim to know what "fairness" is?

The problem is that progressive taxation is "unfairness" raised to an ideal. Renaming it won't change anything. We don't charge each citizen an equal amount because they all are equally likely to be recipients of government protection. No, we charge a percentage, so the rich pay more.

And, in fact, we increase the percentage, as well, as their incomes rise. It's like a penalty we put on success.

What has this to do with (((FAIRNESS)))?

It's more about extortion. (Personally, I am a little worried that Kathleen Wynne will find out we exhale carbon dioxide, and include us in the carbon levy -- all to be sure we "do our share" in the redemption of the world.)

The Liberals are getting some pushback because they want to increase the extortion on certain groups. But they will be extorting more and more from all of us soon. The planned deficit is over $28 billion. Imagine what it will likely be when we know the actual figures. Then the fight against 'unfairness' will go into high gear.

Why the Liberal plan to tax entrepreneurs who invest will come back to haunt Canada

This is one of the few cases that all Canadians should be up in arms about taxing the rich. It's bad policy, and it's bad for all Canadians

By now you are probably familiar with the Liberals’ proposed changes to the tax treatment of privately held corporations, announced in July and currently under intense scrutiny by various stakeholders.

There are two basic pillars to the proposed changes, and both are predicated on the loaded notion of “fairness” among taxpayers. The first pillar addresses “income sprinkling”, or splitting income among spouses and family members of business owners in order to lower total taxes paid by a household. It appears as though pretty much everyone sees major problems with these proposals, and there are countless impassioned and well-informed pieces available online that address the issue in detail.

The second pillar is the proposed dismantling of the 40-year old structure that allows private business owners to effectively shelter their non-reinvested earnings in investment companies (holdcos), investing 74-cent dollars as opposed to the 47-cent dollars that high-earning employees are left with to invest on an after-tax basis.

Jack Mintz: Mere ‘tweaks’ won’t fix the Liberals’ draconian tax-reform plan
Embracing the alternative: Investment advisory firm Westcourt Capital growing as Baby Boomers cash out
A great deal has been written about the negative effect this will have on small business owners — the lifeblood of the Canadian economy — from farmers to dentists and doctors to corner store owners. I agree with the many who believe that these entrepreneurs ought to continue to receive tax incentives for starting businesses in order to promote risk taking and drive GDP growth in our country.

Relatively little has been written, however, about the very wealthy entrepreneurs who own not-so-small private companies (the proposals cover all privately owned businesses, not just small businesses), many of which generate millions of dollars of profits each year to their founder/shareholders.

Because we live in a “tax the rich” period of Canadian history (including the highest income tax rates seen in at least two generations), it is not popular to speak out in favour of the top one per cent of the one per cent, since these taxpayers have been demonized by many groups, all in the name of fairness.

Without going into the mechanics of it, the proposed effective 71 per cent tax on passive investments by private corporations (i.e. earnings by companies not reinvested into the business but rather into other investments of any description) strives to achieve “real time integration,” or a state in which entrepreneurs’ profits will be treated as if those monies had been received as salaries.

What seems to be lost on the pitchfork-toting legislators storming the gates of the rich is that the proposed legislation, while seemingly “equal,” is both unfair and draconian.

It is true that taxing a salaried employee making $1 million per year the same in real-time as a business owner who makes $1 million in profit makes them equal. But fair and equal are not the same thing. It is unfair to tax business owners — even the most successful among them — equally to salaried employees, who do not take on the significant personal financial risks associated with entrepreneurship and job creation.

Legislators knew exactly what they were doing when they created the current system for the taxation of private businesses — creating incentives for risk-taking by rewarding success with favourable tax treatment of profits.

To think that taking a machete to the existing incentives without affecting the behaviour of those involved is both crazy and naïve.

First, assuming that Canadian risk-takers would take the same risks in the absence of tax incentives is like assuming that people would give as much money to charity without the tax receipts those donations generate, or that investors would support exploration and development of high risk resource-related projects in the absence of flow-through tax benefits. Removing incentives — especially those so deeply entrenched in our tax code — will dramatically reduce the behaviour promoted by those incentives, often resulting in a decrease in total tax dollars received as the tax rates effectively increase.

The corollary of this is that anyone thinking about buying an existing business in Canada from the countless Baby Boomer entrepreneurs who see the value of their business as their nest egg will now have to think twice, reducing the value of all of those businesses across the board.

Second, the Liberals are missing a critical piece in the “tax passive investments to avoid sheltering and achieve real-time integration” approach: Passive investments are passive to the investor, but are anything but passive to those in whom the investments are made.

Entrepreneurs — especially those with significant retained earnings — tend to invest in other entrepreneurs, since it’s what they know. Tens of billions of dollars are invested each year in business start-ups and growth through a variety of debt and equity instruments in businesses often starving for the growth capital they require.

Taxing these passive investments at 71 per cent will — and of this I am certain — significantly reduce any incentive to take investment risks with retained earnings, dramatically affecting capital formation by active companies and, again, reducing the overall taxes collected on those monies when measured in dollars instead of percentage points.

Third, and perhaps most importantly, the draconian measures proposed will create not only a disincentive to take risk in the first place, but a strong incentive to study and adopt complex structures to take fortunes offshore, resulting in the type of conundrum now faced by American legislators — how to change the tax code to stop taxpayers from paying their taxes outside of the country to avoid outrageous tax rates for business.

If the Robin Hoods among legislators can put aside their “us against them” mentality long enough to consider the two sides of these issues, they will conclude that money and talent, as portable and fluid resources, will inevitably follow the path of least resistance, whether that resistance comes in the form of undue regulation or high taxes. To create a system destined to see these valuable and scarce resources benefit the economies of other countries is as avoidable as it is sad.

The wealthy already pay by far the most in taxes (whether measured in dollars or in percentage points), providing a foundation for government to redistribute wealth in what most loyal Canadians think is, in principle, fair and just.

Should the changes come into force later this year, that will become a watershed moment for Canada — a final crossover from “socially liberal and fiscally conservative” to “socially liberal and fiscally insane.”

This is one of the few cases that all Canadians should be up in arms about taxing the rich. It’s bad policy, and it’s bad for all Canadians.

Why the Liberal plan to tax entrepreneurs who invest will come back to haunt Canada
There are two basic pillars to the proposed changes, and both are predicated on the loaded notion of “fairness” among taxpayers. The first pillar addresses “income sprinkling”, or splitting income among spouses and family members of business owners in order to lower total taxes paid by a household. It appears as though pretty much everyone sees major problems with these proposals, and there are countless impassioned and well-informed pieces available online that address the issue in detail.

The second pillar is the proposed dismantling of the 40-year old structure that allows private business owners to effectively shelter their non-reinvested earnings in investment companies (holdcos), investing 74-cent dollars as opposed to the 47-cent dollars that high-earning employees are left with to invest on an after-tax basis.

The two bold points above are ones that I see everywhere and I don't entirely agree with the way that its been portrayed.

1) Implying that small business is casually using their corporation to income split is an interesting argument, however one that is already largely addressed in ambiguity of the income tax act.

Section 67 of the Income Tax Act "reasonableness of expenses incurred to gain or produce income from business what is reasonable expense" effectively gives the CRA the power to deem the salaries of related employees as unreasonable expenses and in turn penalizes the business owner.

This idea that an owners 18 year old is being paid 100k as the "Senior Director of Media Relations" as a means to lower the corporations tax burden is already prohibited by Section 67.

So much so that the CRA if determined that the excessive salaries were knowingly paid, or circumstances amounting to gross negligence can penalized as much as 50% of the slated deduction (the salary itself).

The CRA has had no issue enforcing this to date as such I am not sure why the current government seems to be implying its the wild west with small business in this regard, especially given how significant the potential penalties are for doing exactly that.

2) There seems to keep being an implication that leaving money in a holdco is tax avoidance rather than tax deferral.

Business' leave capital within business, its how they operate.

Business pays taxes on profit;
Once the taxes are paid they are left with excess post tax capital.

At that point business can pay its owners dividends (which are taxable as T5 income to the individual) or they can keep their post tax capital in the business.

If its kept there for ten minutes or ten years should that capital exit the company either by way of management fees (T4 Income) or Dividends (T5 income) the Feds get their pound of flesh eventually.

Please excuse me if I take this into a deeper look at the Liberal Party of today.

I think it's the association with the other side -- I don't even say 'the right' -- that makes this gang of Liberals want to destroy the good parts of Harper's tax policies. They are targeted tax interpretations that lower taxable income for small businesses. They were a conscious subsidy to small business to help them create jobs. The Liberals use talk of "unfairness" to disguise their true motives. It isn't revenue, and it isn't ideology so much as refusing to allow any of the Harper innovations become enduring policy. They don't want that to stand as a reminder of another regime.

The way I see it, this government is a tandem of Justin and Gerald Butts, which is probably overly simplistic, but Butts is an extreme environmentalist and Justin is an extreme feminist, of the kind that is currently called manginas. So we are seeing extremism in the environment and extremism in the service of whatever it is now that women want.

And the third 'deep sentiment' of this government is demonizing and destroying the policies of the previous government. Thet don't want any icons left.

This is why it is hard for Conservatives to lay hands on them. The pretense is that the Green stuff is not ideology, it's Science. And the pretense about gender is that putting their thumbs on the scales is simple "Justice". And how does a Conservative justify targeted tax interpretations that make life easier for small businessmen?

To my shock, it seems that Conservatives have no argument about environmentalism, and particularly the crap coming out of the UN''s IPCC. They're as ignorant about the real state of climate science as the greenies are.

Worse, they don't have a shadow of a clue about what is happening on the ground around the gender issue. Conservatives don't understand that the government has turned universities, along with Human Rights Tribunals, into instruments of social engineering. The education system is producing people for a social system that does not (yet) exist. In fact, Women's Studies majors are kind of useless as employees.

It isn't a matter of people making the wrong educational choices. They are told to do what they love, after all -- especially the important students, the females. None of it prepares people for the real world or cultivates a higher sensibility. It makes some of them 'shock troops' in an effort to re-make the world into a "fair" place.

These shock troops of the new social order go out into the labour force -- particularly the women, who benefit from major biases in government and corporate hiring -- and use the so-called Human Rights system' to enforce their new standards. (Note: they do not use the criminal code for most of this stuff because it does not apply! Put differently, the behaviour being changed is entirely legal! But resisting can cost you your job, or get you kicked out of university and blacklisted in educational institutions.)

That's why the firing of the Google engineer was so interesting. He is a Harvard PhD in an area where computers and biology overlap. So he knows his biology, and he knows that (1) sex is not a matter of choice; and (2) that the sexes have different abilities and interests. So expecting 50% of Google's engineers to be female was an unreasonable organizational goal, he implied. Only implied, in a document meant for discussion in a small work-group, in a corporate atmosphere that encourages such exchanges, and whose motto is Do no evil. And it got him fired.

That's not a rare thing. All over the occupational structure, men are having their careers side-lined, often without them knowing about it, because of whispered allegations. None of that messy "other side of the story" stuff. Justin ran off two of his MPs when he was the leader of the third party -- without even thinking of hearing their side of the story. That's just an example. If MPs get treated that way, on that evidence, imagine how the lower order males are treated. The definition of what is acceptable or, in the modern patois, "appropriate", is always expanding, and women do lie. It is now at the point where women can have men arrested on their word alone. The court standards of proof in sex trials have already been lowered, and are being lowered again, in the search for more convictions. (That would be Bill C-51.)

I could go on and on. Conservatives don't even seem to notice it, and don't even seem to care. But, believe me, if you have sons, it affects you and I don't think it's too wonderful for women either. Surveys show women are far less content today than they were in the 1950ies

The Conservative Party has been saying "me too" ever since Joe Clark decided not to change his name to McTeer. They don't recognize that gender stuff has become the new McCarthyism. It muzzles and intimidates people through their work. I works like the Communists did -- Human Resources is where the present day commissars reside.

Even with the tax stuff -- the party has had few effective voices. Those voicing strong, fact-based criticisms are usually parties injured by the new policies. The politicians don't seem to know where the shoe pinches anymore. They are looking for a different compromise on the climate, for example, rather than understanding that it is a massive transfer of wealth. Just minimally, you'd think they'd have the wit to demand an explanation of just how sending money to African dictators will do jack-shit for the environment.

Beyond that, the winds that stir the public are populist winds, just as the Conservative Party turns itself over to a group of fey experts with experience sitting in a swivel chair, mostly.

In the 21st century, conservatism has to be more than keeping things the same, or making it good for business. The "same" you are conserving is an advanced welfare state that is unsustainable! It's unbelievably short-sighted and ... well, stupid.

To be effective, Conservatives have to conceive of themselves steering the society to a different place than the other guys would take it. Otherwise, why bother?

( trudeau has come out and said its just wealthy folks complaining about the changes ? ok anyone who owns a business or farm , etc is now suddenly very wealthy by his thinking , it sounds like something a communist dictator would say when pushing thru something like this )

Trudeau: 'Wealthy folks' who would be affected by tax changes 'making a lot of noise'

Prime Minister Justin Trudeau says his government's proposed tax changes aren't worrying most Canadians — except for those affected, who he said are making "a lot of noise."

Trudeau sat down with Here & Now's Debbie Cooper on Tuesday and said he's had a lot of conversations with people in Newfoundland and Labrador since arriving Monday, and added few people have brought up the proposals.

"A lot of those wealthy folks are really fighting to keep those benefits that they have, and they're making a lot of noise," he said.

The government has been consistently saying it needs to make sure the middle class doesn't pay more in taxes than it needs to, he said.

People who make less than $150,000 won't be affected

"That also applies to middle-class small businesses — fishers, farmers, people who work extraordinarily hard and contribute to growing the economy. We just want to make sure that people using private corporations don't have benefits that aren't available to average Canadians, and that's where we're making a little tweak."

'The system as it's set up gives too many benefits to wealthy people and not enough to the people who really need the support.'

- Justin Trudeau

In response to criticism from small-business owners that the changes appear punitive, Trudeau said the government is listening to concerns, and added people making less than $150,000 won't be affected negatively by the changes.

"At the same time, we're trying to ensure that folks who are successful are paying their fair share, and it's not fair that people who are wealthy have tax rules that they can get out of paying as many taxes and as much tax as middle-class families, and that's something that goes to the heart of fairness."

Trudeau said the government isn't suggesting that people who have benefited from the current system are doing anything wrong.

N.L. will benefit from Canada-Europe free trade, says PM

"We're just reflecting on the fact that the tax system as it's set up gives too many benefits to wealthy people, and not enough to the people who really need the support," he said.

Asked what the federal government is doing to help Newfoundland and Labrador experience the same economic growth being experienced in the rest of Canada, Trudeau was light on specifics but mentioned $100 million for the Atlantic Fisheries Fund and working closely with Premier Dwight Ball to improve innovation and immigration in the province.

"When we talk about the benefits of the Canada-Europe free trade agreement, the proximity of Newfoundland to Dublin, to continental Europe as compared to the rest of the country, is going to be a tremendous advantage here," he said.

I suppose I should be cheered by this bit of clumsiness on Trudeau's part. It's the kind of thing that may make mentioning your selfies with him less chic at the Golf Club. He is pissing off all the right people.

Except I half expect to see, two weeks from now, Andrew Scheer echoing the same sentiments.

That's unfair, but it isn't even that Scheer doesn't have the same priorities I do -- Harper didn't either, but Harper was getting things done. But, on his worst day, he was keeping this gang of spendthrifts out of office. And he was a lot better than that most of the time.

I haven't seen Scheer take issue with anything in a very effective way. He isn't commanding media attention. I hope he isn't relying on his performance in the House to take him to power. (I don't mean to put down his House performance, it's more that he probably doesn't understand the degree to which the media will go to screw him.
.
But I think of how green Harper was, at first. Paul Martin openly mocked him, after the Conservative loss on the same-sex marriage thing. And they had really lost -- it was like the whole party had no heart for the fight by the end of the sessiom. They looked demoralized. Harper had never really laid a glove on the Liberals.

If you really want to laugh, look at Joe Clark as he set out to depose Pierre Trudeau. And, in fact, the young Pierre Elliott Trudeau looked star-struck and awed by his own wonderfulness in the early part of his career, when Pearson first brought him into the cabinet.

He deserves a chance, but he should also be giving people a way to get on-side with something.

As this effects how post tax capital is managed in 100% of all small business and according to StatsCan more than two thirds of small business owners made less than $73,000 a year the Prime Minister's comments seem to be disconnected from reality of most small business ownership.

Why the rich should revolt — and it's not for the reasons they thinkTerence Corcoran: So-called ‘rich’ Canadians are missing the point in their outrage over Ottawa’s tax reforms, and they will lose the battle as a result

On July 15, a beautiful 26 C summer day in Ottawa, Finance Minister Bill Morneau announced the Justin Trudeau government’s plan to revamp tax rules for small business corporations. The Liberals say these corporations — formally known as Canadian-Controlled Private Corporations — take advantage of giant tax loopholes that Canada’s wealthy use to dodge billions of dollars in taxes.

The loopholes are complicated and Morneau’s proposed fixes are even more so. The minister allowed 75 days for experts and users of CCPCs to assess the proposed changes. Some say the review period is too short, but it has been long enough for a groundswell of opposition to build among tax lawyers, doctors, farmers, small business owners and others.

As the war against Morneau’s reforms grows, it has been easy — even popular — to portray critics as loophole-seeking small business owners and greedy doctors and farmers trying to pay less tax than they should.

One columnist dismissively described the anti-reformers as just a bunch of whiners who don’t want to “pay the same tax as others earning the same or less income.” And a report last week on CBC’s The National implied that top income earners pay “an effective tax rate of 50 per cent,” while an incorporated small business owner pays a “much smaller” corporate tax rate of 15 per cent.

Such gross misrepresentations feed the class warfare beast at the heart of the Liberal tax agenda. The CCPC reforms may indeed close tax benefits buried in the CCPC structure, as Morneau believes, but the prime objective is to push the incomes of more and more Canadians into top marginal tax brackets. [emphasis added]

In one sense, Morneau has triggered something of a tax revolt among the rich — it’s about time — but it’s a revolt that will fail if wealthier Canadians and the Coalition for Small Business Tax Fairness continue to claim they’re entitled to lower small business tax rates, income sprinkling and the passive investment, capital gains and dividend dodging gambits.

( this star writer tries to claim this plan is politically necessary as the liberals agenda has stalled and they want to appear as doing something )

Why Bill Morneau’s tax reform plan is politically necessary: Walkom

The Liberal government's agenda has stalled. It needs to prove that it still has the chops.

Finance Minister Bill Morneau fields questions as the Liberal cabinet meets in St. John's, N.L. last Tuesday, "Morneau is trying to limit his enemies to just one category – well-heeled professionals who incorporate themselves as small businesses simply to pay less income tax," writes Thomas Walkom.

By Thomas WalkomNational Affairs Columnist

Mon., Sept. 18, 2017

Justin Trudeau’s agenda has stalled. On issues ranging from peacekeeping to climate change, the prime minister’s Liberal government is treading water. It needs to show it can get more done.

In the first months following its election two years ago, the Trudeau government was a whirlwind of activity. It negotiated a health accord with all of the provinces and a climate change accord with most of them.

It outlined bold plans to recast the relationship between Ottawa and Indigenous peoples. It promised a return to United Nations peacekeeping.

It began work on so-called democratic reform plans designed to revolutionize the system for electing MPs.

It completed talks, begun by the previous Conservative government, for a comprehensive economic and trade pact with the European Union.

It expanded Canada’s on-the-ground military role in the war against Daesh.

It shifted some of the tax burden from the rich to the not-quite-so-rich and replaced a universal child benefit system with one based on income.

It expanded the Canada Pension Plan and rolled back Conservative measures that had raised the age of eligibility for Old Age Security.

As all of this was going on, the American public chose to elect Donald Trump president — a decision that put the North American Free Trade Agreement between Canada, the U.S. and Mexico in jeopardy and forced Ottawa to reorder its priorities.

The new Trudeau government was busy.

But not all of that hustle and bustle translated into action.

The democratic reform plans were summarily dropped. The oft-promised UN peacekeeping role has still not yet materialized.

Experts say that the centrepiece of the climate-change accord — a national carbon tax — won’t be enough to let Canada reach its promised emission reduction targets.

In any case, those promised targets aren’t enough to forestall global warming.

Trudeau’s vision of a grand bargain between fossil-fuel proponents and foes that would give “social licence” to crucial oil pipelines has foundered on the reality of politics in British Columbia and Quebec.

In these two provinces, essential for any pipeline aimed at bringing Alberta heavy oil to the Canadian sea coast, it seems there is no social licence to be had.

Meanwhile, Trudeau’s ambitious Indigenous agenda has ground to a halt as the new government comes face to face with the complexity of the issues at hand.

Ottawa’s response, a massive bureaucratic reorganization, may be useful in the long run. But it is unlikely to provide quick relief.

For a government getting ready to face the electorate in two years, this is a problem. Trudeau needs to demonstrate that he still has the chops.

In particular he needs a success to burnish his claim that this government is committed to helping the middle class.

For Trudeau, tax reform is the necessary adjunct to free trade. As he said once to the Star editorial board, liberalized trade may create wealth but it does so unevenly. The trick is to share the gains from globalization more equitably. The mechanism for doing this is tax reform.

Which is why the Liberals promised, in their 2015 election platform, to take aim at tax breaks that favour the rich.

They have already broken one campaign pledge — to eliminate tax breaks for corporate executives paid in the form of stock options. They need something in its stead.

Morneau could have opted for comprehensive tax reform. He could have taken aim at the entire panoply of breaks written into the income tax act.

Wisely perhaps, he didn’t. Allan MacEachen, the last finance minister who tried that gambit, raised such an outcry from enraged special-interest groups that he was forced to beat an ignominious retreat.

By contrast, Morneau is trying to limit his enemies to just one category — well-heeled professionals who incorporate themselves as small businesses simply to pay less income tax.

Even this is politically dangerous. But for a government desperate to present itself as the tribune of the middle class, it is also politically necessary.

The ritual, almost obsessive-compulsive invocations of the sorrows of the middle class were always made up, as made-up as the party’s pose as soak-the-rich populists

Andrew Coyne
Andrew Coyne

October 16, 2017
10:14 PM EDT

Naturally, they were both in shirtsleeves, rolled to the elbows: just a couple of regular guys in spread collars talking about their love for the middle class in a completely natural, unforced setting hundreds of miles from the nearest Parliament.

Only the act isn’t working quite as well any more, is it? Delivering his remarks, the prime minister looked strangely ill at ease, his smile a little tighter than I recall. For his part, the finance minister — Bill Morneau, for the record — was as rotely unpersuasive as ever. But it was when they took questions that the practised hokum of politics gave way to an excruciating awkwardness.

Perhaps they had thought the local media, summoned to a Stouffville, Ont., pizzeria to witness the reading of the talking points, would be less disruptive than their Parliament Hill counterparts of the Liberals’ preferred version of events: that the government had listened to the public and was now adjusting its proposed changes to small business taxes in line with what it heard — except for the cut in the small business tax rate to nine per cent, which was merely a totally coincidental decision to keep a promise the party had previously decided to break, and not at all a bit of rum hastily produced to rub on the gums of a squalling baby.

But damned if the rubes didn’t want to ask questions of Morneau: about the changes to the changes, about the private corporation he had failed to disclose — the one holding his villa in France — or the rest of his vast personal and family holdings, which he has failed either to divest or to place in a blind trust, as federal conflict of interest rules would seem to require. To which Justin Trudeau replied, even as Morneau was approaching the mic: “I’ll take them.” After all, as he reminded them more than once, it isn’t every day “you get a chance to talk to the prime minister.”
See Also John Ivison: Trudeau’s tax-reform surrender is served with extra cheese
Chris Selley: An utterly banal tax cut announcement, other than Trudeau’s bizarre behaviour
Stephen Gordon: Liberals’ tax strategy ignores growing but marginalized population

Eventually, when the ungrateful wretches continued to direct questions to the finance minister about a central issue in his portfolio, a major policy for which he was responsible, and his own ethical conduct, the prime minister briefly ungagged him. But by then the point was made. So damaged is Morneau by the events of recent days and months that he cannot even be allowed to answer questions for himself. We have come to expect that in Question Period. But not in Stouffville!

Whether these latest revisions to the Liberals’ original proposals will succeed in calming the passions they have aroused is hard to say, in part because we do not yet know what they are: the government is determined to drag out the unveiling over the rest of the week.

The one big thing we know they are doing, the cut in the small business rate, is terrible policy, in as much as it will make worse the very problem the July proposals were supposed to address: the enormous gap between the small business rate and the top personal and corporate rates, and the incentives for incorporation and other tax planning to which it gives rise. As before, tax policy will continue to reward businesses for staying small, while punishing them for growing. Only now the penalty will be that much larger.

But it seems clear the harm to Liberal fortunes goes well beyond the particulars of the Finance proposals, or the tongue-tied plutocrat behind them. Rather, there is a hollowness at the heart of this government, a fundamental falseness, which the episode has exposed. The ritual, almost obsessive-compulsive invocations of the sorrows of the middle class were always made up, as made-up as the party’s pose as soak-the-rich populists, and with the same objective: to inoculate Trudeau, and latterly Morneau, against the charge of being entitled trust-fund millionaires, with no concept of the struggles of ordinary folk. Look at us, they seem to say, attacking our own!

Bill Morneau and Justin Trudeau: a couple of regular, middle class guys out for pizza and some tax talk. THE CANADIAN PRESS/Nathan Denette

The small business tax changes were supposed to be a part of that campaign. Instead, they may well have blown it up. It wasn’t just that so many of those who were targeted, or felt themselves targeted, were not among the rich, or did not feel themselves to be so. It was the obvious contradiction between Trudeau/Morneau’s zeal to curb the use of tax shelters by others, less wealthy than themselves, and the equal zeal with which they have availed themselves of their own: not only the family trusts in which the fortunes of both are held, but the numbered corporations and other shelters to which the monied have access.

Understand: there is nothing wrong with such vehicles on their own. Neither is their existence relevant to the merits or otherwise of the government’s tax proposals, in substantive terms. But if the issue is not the proposals themselves, but the supposed virtues of the government that proposed them — and in politics, it always is — then this sort of hypocrisy can be lethal. If Trudeau and Morneau have been unable to give a good explanation of the contradiction, it is because there is no good explanation.

There is a time in the life of every government when a number of seemingly disparate issues start to coagulate into one big issue. The small business tax changes, Morneau’s disclosure problems, even the $212,000 spent on the cover page for the 2017 budget: add these to previous controversies over Trudeau’s fundraising dinners with Chinese billionaires and holidays with the Aga Khan, and the picture that emerges is of a government that values symbols over substance, talk over action, public relations over transparency — in all, a government of glossy, toothy, touchy-feely phonies.

Two years out from the next election, they will need to take care the impression does not get baked in.

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